Transition from accounting principles generally
accepted in the United States (US GAAP)
to International Financial Reporting Standards (IFRS)
Introduction
In accordance with European Union regulations as implemented by Norway, Statoil is required to adopt International Financial
Reporting Standards (IFRS) for accounting periods beginning on or after 1 January 2007.
Consequently the Group’s first IFRS results will be for the quarter ended 31 March 2007. These results and the financial
statements for the year ended 31 December 2007 will include comparative IFRS financial information for 2006. Disclosure notes
as required by IFRS will be provided in the 2007 financial statements. No disclosure notes have been prepared in this transition
document.
Highlights
•
Consolidated net income for the year ended 31 December 2006 down by NOK 0.5 billion compared to US GAAP.
•
Earnings per share down by NOK 0.22 compared to US GAAP.
•
Increased total equity of NOK 2.8 billion at 1 January 2006 and 31 December 2006 compared to US GAAP.
•
The adoption of IFRS has an impact on the presentation of the Group’s accounts but does not change the
underlying business performance. There are no changes to the business model, strategy, risk management
processes or cash flows.
Reconciliation of 2006 consolidated net income
Q1
(in NOK million)
Consolidated net income under USGAAP
1. IAS 39
Financial instruments
2. IAS 19
Pensions
3. IAS 2
Inventory valuation
4. IAS 37
Asset retirement obligations (ARO)
5. IAS 12
Deferred tax adjustments
6.
Other
10 397
10 029
1 401
206
(4)
Consolidated net income for the period under IFRS
(9)
Q3
8 808
Year ended
Q4 31 Dec. 2006
12 101
41 335
(128)
229
1 708
(7)
28
8
305
(320)
194
(500)
12
12
79
117
(27)
(286)
278
14
(49)
(170)
(499)
(704)
382
(187)
(318)
(347)
(471)
(1 346)
Net changes
Q2
10 779
9 842
8 490
11 754
(321)
220
(1 381)
40 865
Reconciliation of equity
(in NOK million)
USGAAP equity (incl. minority interest)
1.
IAS 39
Financial instruments
2.
IAS 19
Pensions
3.
IAS 2
Inventory valuation
4.
IAS 37
Asset retirement obligations (ARO)
5.
IAS 12
Deferred tax adjustments
6.
1 January
2006
31 March
2006
30 June
2006
30 Sept.
2006
108 136
116 924
106 389
117 500
6 453
7 854
8 061
7 933
8 162
(5 338)
(5 340)
(5 349)
(5 366)
(2 720)
2 820
3 125
2 805
2 999
2 499
31 Dec. 2006
123 693
(233)
(222)
(210)
(148)
(47)
(3 767)
(5 113)
(5 122)
(5 193)
(6 465)
Other
2 821
2 840
2 758
1 897
1 395
Net changes
2 756
3 144
2 943
2 122
2 824
110 892
120 068
109 332
119 622
126 517
Equity under IFRS
Impact on cash flow statement
The Group prepares the cash flow statement for both US GAAP and IFRS using the indirect method. Consequently,
adjustments made to working capital items in the balance sheet on conversion to IFRS lead to an adjustment in the IFRS cash
flow statement. There are no significant changes between cash flows from operating activities, investing activities, and financing
activities. No adjustments have been made to cash and cash equivalents, and no other adjustments have been made to the
cash flow statement on conversion.
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
1
Summary of major changes
The major changes required by the introduction of IFRS are:
•
Financial instruments – consist mainly of certain contracts that are not accounted for as fair value derivatives
under US GAAP, due to exemption rules, are accounted for as fair value derivatives under IFRS and carried at
fair value with changes to income statement. The effect is an increase in 2006 income before tax of NOK 1.9
billion and an increase in net income of NOK 0.4 billion.
•
Pensions – Actuarial gains and losses spread over future periods under US GAAP have been recorded directly to
equity under IFRS. The discount rate used under US GAAP differs from that used for IFRS. The Group adopted
FAS 158 effective 31 December, 2006, and from this date the difference in the discount rate is the only difference
between the US GAAP and IFRS balance sheets. The effect is a reduction in pension assets of NOK 3.9 billion
and an increase in pension liabilities of NOK 1.4 billion as at 1 January, 2006 (before the date of adoption of FAS
158) and a reduction in pension assets of NOK 2.2 billion and an increase in pension liabilities of NOK 0.5 billion
at 31 December, 2006. The effect on retained earnings, net of deferred taxes, is a reduction of NOK 2.0 billion
and 0.9 billion 1 January, 2006 and 31 December, 2006, respectively.
•
Inventory valuation – LIFO method used under US GAAP is replaced by FIFO method for IFRS. The effect is a
reduction in 2006 income before tax of NOK 0.3 billion and a reduction in net income of NOK 0.2 billion.
Each change is described in more detail in this document. The effect of each change on income statement and balance sheet
are shown below.
Explanation of transition to IFRS
Statoil will adopt “International Financial Reporting Standards (IFRSs) as adopted by the European Commission for use in the
European Union” (“EU-IFRS”) for the first time in its consolidated financial statements for the year ended 31 December 2007,
which will include comparative financial statements for the year ended 31 December 2006. Currently EU-IFRS has certain
exemptions from IFRS as adopted by the International Accounting Standards Board (IASB), which are not applicable to the
Company. Accordingly, there would be no difference between IFRS and EU-IFRS in the presentation in the accompanying
financial information. IFRS 1 First-time Adoption of International Financial Reporting Standards requires that an entity develop
accounting policies based on the standards and related interpretations effective at the reporting date of its first annual IFRS
financial statements (e.g., 31 December 2007). IFRS 1 also requires that those policies be applied as of the date of transition to
IFRS (e.g., 1 January 2006) and throughout all periods presented in the first IFRS financial statements. The accompanying
accounting policies in this document have been prepared in accordance with those EU-IFRSs effective, or issued and early
adopted, at the date of this report. The EU-IFRSs that will be applicable at 31 December 2007, including those that will be
applicable on an optional basis, are not known with certainty at the time of preparing this interim financial information. As a
result, the accounting policies used to prepare these financial statements are subject to change up to the reporting date of
Statoil’s first IFRS financial statements. The accounting policies applied are set out in Appendix 1.
In preparing the opening IFRS balance sheet, the Group has reconciled amounts reported previously in financial statements
prepared in accordance with its old basis of accounting (US GAAP) to IFRS. An explanation of how the transition from US
GAAP to IFRS has affected the Group’s shareholders’ equity (taking into account the effect on deferred tax assets or liabilities)
and net income is set out in the following tables and the notes that accompany the tables.
The restatement/reconciliation tables have been prepared only for the transition to IFRS. Given this specific aim, the information
provided in this document is not intended to substitute the full financial statement disclosure that will be provided in the first
complete financial statements prepared under IFRS.
7 May, 2007
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STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
Appendices
Further information is included in the Appendices as follows:
1. IFRS Accounting policies
2. Use of IFRS 1 Exemptions
3. Consolidated financial statements 2006 IFRS
4. Restatement of the balance sheets at 1 January 2006 and 31 December 2006, including description of primary changes
5. Restatement of the income statement for the year ended 31 December 2006
6. Restatement of the quarterly financial statements for 2006
7. Restatement of the quarterly financial statements by segment for 2006
8. Balance sheet reclassifications from US GAAP format to IFRS format 31 December 2005
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
3
APPENDIX ONE - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union (EU) and do not utilise the portfolio hedging ‘carve out’ permitted by the EU.
Currently EU-IFRS has certain exemptions from IFRS as adopted by the International Accounting Standards Board (IASB),
which are not applicable to the Company. Accordingly, there would be no difference between IFRS and EU-IFRS in the
presentation in the accompanying financial information.
Basis of preparation
The financial statements are prepared on the historical cost basis with some exceptions, as detailed in the accounting policies
set out below. These policies have been applied consistently to all periods presented in these consolidated financial statements
(subject to certain exemptions allowed by IFRS 1) and in preparing an opening IFRS balance sheet at 1 January 2006 for the
purpose of the transition to IFRS. The accounting policies have been applied consistently by Group entities.
Basis of consolidation
Subsidiaries
The consolidated financial statements include the accounts of Statoil ASA and its subsidiaries. Subsidiaries are entities
controlled by the Company. Control exists when the Group has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. Subsidiaries are consolidated from the date of their
acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control
ceases.
All intercompany balances and transactions, including unrealised profits arising from intragroup transactions, have been
eliminated in full. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Minority interests represent the portion of profit or loss and net assets in subsidiaries that is not held by the Group
and is presented separately within equity in the consolidated balance sheet.
Associates and joint ventures
Interests in jointly controlled assets and operations are recognised by including the Group’s share of assets, liabilities, income
and expenses on a line-by-line basis. Interests in jointly controlled entities are accounted for using the equity method.
Investment in companies in which Statoil does not have control, but has the ability to exercise significant influence over
operating and financial policies, are classified as associates and are accounted for using the equity method.
Statoil as operator of joint ventures
Indirect operating costs such as personnel costs are accumulated in cost pools. These costs are allocated to business areas
and Statoil operated joint ventures on an hours incurred basis reducing the costs in the Group income statement.
Only Statoil’s share of profit and loss and balance sheet items related to Statoil operated unincorporated joint ventures are
reflected in the consolidated statement of income and balance sheet.
Foreign currency
Foreign currency transactions
The individual financial statements of each Group entity are presented in the currency of the primary economic environment in
which the entity operates (its functional currency). For Statoil’s foreign subsidiaries the local currency is normally identical to the
functional currency, with the exception of some upstream and trading subsidiaries, which have US dollar as functional currency
as the majority of the revenues and costs are in US dollar.
In preparing the financial statements of the individual entities for the purposes of consolidation, transactions in foreign
currencies (those other than functional currency) are translated at the foreign exchange rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the foreign
exchange rate at the balance sheet date. Foreign exchange differences arising on translation are recognised in the income
statement. Non-monetary assets that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transactions.
Translation of financial statements of foreign operations
For the purpose of the consolidated financial statements, the results and financial position of each entity are translated into
NOK, which is the presentation currency of the consolidated financial statements.
The assets and liabilities of foreign subsidiaries (whose functional currencies are other than NOK) are translated into NOK at the
foreign exchange rate at the balance sheet date. The revenues and expenses of foreign subsidiaries are translated using
4
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
average monthly foreign exchange rates, which approximates the foreign exchange rates on the dates of the transactions.
Foreign exchange differences arising on translation are recognised directly as a separate component of equity.
Business combinations and goodwill
In order for a business combination to exist, the purchased group of assets must constitute a business (an integrated set of
activities and assets conducted and managed to lower costs) and will generally consist of inputs, processes and outputs. This
requires judgment to be applied on a case by case basis as to whether the acquisition meets the definition of a business
combination. Purchases of licences for which no decision has been made to develop are treated as asset purchases.
Business combinations are accounted for using the acquisition method of accounting. The acquired identifiable tangible and
intangible assets, liabilities and contingent liabilities are measured at their fair values at the date of acquisition. Any excess of
the cost of acquisition over the net fair value of the identifiable assets acquired is recognised as goodwill.
Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the acquirer’s
interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is
measured at cost less any accumulated impairment losses.
Goodwill may also arise upon investments in jointly controlled entities and associates, being the surplus of the cost of
investment over the Group’s share of the net fair value of the identifiable assets. Such goodwill is recorded within investments in
jointly controlled entities and associates, and any impairment of the goodwill is included within the income from jointly controlled
entities and associates.
Non-current assets held for sale and discontinued operations
Non-current assets and disposal groups classified as held for sale are measured at the lower of carrying amount and fair value
less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be
recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is
highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be
committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of
classification. Property, plant and equipment and intangible assets once classified as held for sale are not depreciated.
Discontinued operations comprise those activities which have been disposed of during the period, or remain held for sale at
period-end, and represent a separate major line of business or geographical area of operation which can be clearly
distinguished, operationally and for financial reporting purposes, from other activities of the Group.
Revenue recognition
Revenues associated with sale and transportation of crude oil, natural gas, petroleum and chemical products and other
merchandises are recognised when title passes to the customer, which is normally at the point of delivery of the goods based on
the contractual terms of the agreements.
Revenues from the production of oil and gas properties in which the Group have an interest with other companies are
recognised on the basis of volumes lifted and sold to customers during the period in accordance with the sales method. Where
the Group has lifted and sold more than the ownership interest, an accrual is recorded for the cost of the overlift. Where the
Group has lifted and sold less than the ownership interest, costs are deferred for the underlift.
Revenue is presented net of customs, excise taxes and royalties paid in-kind on petroleum products.
Sales and purchases of physical commodities, which are not settled net, are presented on a gross basis as Revenue and Cost
of goods sold in the Income statement. Activities related to trading and commodity-based derivative instruments are reported on
a net basis, with the margin included in Revenue. Arrangements involving a series of sale and purchase transactions in order to
obtain a given quantity and quality of a commodity at a given location is presented net and included in Revenue.
Transactions with the Norwegian State
The Group markets and sells the Norwegian State’s share of oil and gas production from the Norwegian continental shelf
(NCS). The Norwegian State’s participation in petroleum activities is organised through the State’s direct financial interest
(SDFI). All purchases and sales of SDFI oil production are recorded as Cost of goods sold and Revenue.
All oil received by the Norwegian State as royalty in-kind from fields on the NCS is purchased by the Group. The Group includes
the costs of purchase and proceeds from the sale of this royalty oil in its Cost of goods sold and Revenue respectively.
The Group sells, in its own name, but for the Norwegian State’s account and risk, the State’s production of natural gas. This
sale and related expenditures refunded by the State, are recorded net in the Group’s financial statements.
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
5
Such refundable expenditures relate to activities incurred to secure market access, transportation, processing capacity and
investments made to maximise profitability from the sale of natural gas.
Oil and gas exploration and development expenditure
The Group uses the “successful efforts” method of accounting for oil and gas exploration costs. Expenditures to acquire mineral
interests in oil and gas properties and to drill and equip exploratory wells are capitalised until the well is complete and the results
have been evaluated. Expenditures to drill exploratory wells that do not find proved reserves, geological and geophysical and
other exploration expenditures are expensed.
Unproved oil and gas properties are assessed quarterly; unsuccessful wells are impaired. Exploratory wells that have found
reserves, but classification of those reserves as proved depends on whether a major capital expenditure can be justified, may
remain capitalised for more than one year. The main conditions are that either firm plans exist for future drilling in the license or
a development decision is planned in the near future. Impairment of unsuccessful wells is reversed, as applicable, to the extent
that the events or circumstances that triggered the original impairment have changed.
Expenditures to drill and equip exploratory wells that find proved reserves are capitalised and depreciated using the unit of
production method based on proved developed reserves expected to be recovered from the well. Development expenditure on
the construction, installation or completion of infrastructure facilities such as platforms, pipelines and the drilling of development
wells are capitalised as producing oil and gas properties and are depreciated using the unit of production method based on
proved developed reserves expected to be recovered from the area during the concession or contract period. Capitalised
acquisition cost of proved properties is depreciated using the unit of production method based on total proved reserves. Preproduction cost is expensed as incurred.
Employee benefits
Wages, salaries, bonuses, social security contributions, paid annual leave and sick leave are accrued in the period in which the
associated services are rendered by employees of the Group.
Pensions
The Company and certain of its subsidiaries have pension plans for employees that either provide a defined pension benefit
upon retirement, or a pension dependent on defined contributions. For defined benefit schemes, the benefit to be received by
employees generally depends on many factors including length of service, retirement date and future salary increases.
The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the
amount of future benefit that employees have earned in return for their services in the current and prior periods. That benefit is
discounted to determine its present value, and the fair value of any plan assets is deducted. The discount rate is the yield at the
balance sheet date reflecting the maturity dates approximating to the terms of the Group’s obligations. The calculation is
performed by a qualified actuary.
The interest element of the defined benefit cost represents the change in present value of scheme obligations resulting from the
passage of time, and is determined by applying the discount rate to the opening present value of the benefit obligation, taking
into account material changes in the obligation during the year. The expected return on plan assets is based on an assessment
made at the beginning of the year of long-term market returns on scheme assets, adjusted for the effect on the fair value of plan
assets of contributions received and benefits paid during the year. The difference between the expected return on plan assets
and the interest cost is recognised in the income statement as operating expenses.
Actuarial gains and losses are recognised in full in the group statement of recognised income and expense in the period in
which they occur.
Defined contribution plans (plans where the Company’s obligation is to contribute a defined amount to the employee) are
allocated to net income in the period the employee has rendered the service.
Share-based payments
Employees have the opportunity to buy shares in Statoil ASA annually up to a ceiling of 5 per cent of their gross salary. For
shares held for at least two calendar years, employees receive one bonus share for every share purchased.
The cost of equity-settled transactions with employees is measured by reference to the estimated fair value at the date at which
they are granted and is recognised as an expense over the vesting period of two years.
Research and development
The Group undertakes research and development both on a funded basis for licence holders, and unfunded projects at its own
risk. The Group’s share of the licence holders funding and the total costs of the unfunded projects are development costs that
are considered for capitalisation.
6
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
Development costs which are expected to generate probable future economic benefits and meet all other relevant criteria are
capitalised as intangible assets. All other research and development expenditure is expensed as incurred.
Property, plant and equipment
Property, plant and equipment is stated at cost, less accumulated depreciation and accumulated impairment losses. The initial
cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into
operation, the initial estimate of any decommissioning obligation, if any, and, for qualifying assets, borrowing costs.
Exchanges of assets are measured at the fair value of the asset given up unless the exchange transaction lacks commercial
substance or the fair value of neither the asset received nor the asset given up is reliably measurable.
Expenditure on major maintenance refits or repairs comprises the cost of replacement assets or parts of assets, inspection
costs and overhaul costs. Where an asset or part of an asset is replaced and it is probable that future economic benefits
associated with the item will flow to the Group, the expenditure is capitalised. Inspection and overhaul costs associated with
major maintenance programs are capitalised and amortised over the period to the next inspection. All other maintenance costs
are expensed as incurred.
Depreciation of production installations and field-dedicated transport systems for oil and gas is calculated using the unit of
production method based on based on proved developed reserves expected to be recovered from the area during the
concession or contract period. Ordinary depreciation of other assets and of transport systems used by several fields is
calculated on the basis of their economic life expectancy, using the straight-line method. Straight-line depreciation is based on
the estimated useful lives. Each part of an item of property, plant and equipment with a cost that is significant in relation to the
total cost of the item is depreciated separately. For exploration and production (E&P) assets the Group has established
separate depreciation categories for platforms, pipelines, and wells as a minimum.
The expected useful lives of property, plant and equipment are reviewed on an annual basis and changes in useful lives are
accounted for prospectively. An item of property, plant and equipment is derecognised upon disposal or when no future
economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the
asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the
income statement in the period the item is derecognised.
Intangible assets
Intangible assets are stated at cost, less accumulated amortisation and accumulated impairment losses. Intangible assets
include expenditure on the exploration for and evaluation of oil and natural gas resources and other intangible assets. Intangible
assets acquired separately from a business are carried initially at cost. An intangible asset acquired as part of a business
combination is recognised separately from goodwill at its fair value if the asset is separable or arises from contractual or other
legal rights and its fair value can be measured reliably.
Intangible assets relating to expenditure on the exploration for and evaluation of oil and natural gas resources are not
amortised. These assets are subject to annual impairment testing and are reclassified to property, plant and equipment when
the decision to develop a particular area is made. Other intangible assets (which comprise contractual rights and franchise
agreements) are amortised on a straight-line basis over their expected useful lives. The expected useful lives of the assets are
reviewed on an annual basis and changes in useful lives are accounted for prospectively.
Leases
Leases in terms of which the Group assumes substantially all the risks and rewards of the ownership are recorded as finance
leases within property, plant and equipment and loans and borrowings. All other leases are classified as operating leases and
the costs are charged to income as incurred.
Assets recorded under finance leases are stated at an amount equal to the lower of fair value and the present value of the
minimum lease payments at inception of the lease, less accumulated depreciation and any impairment losses. Capitalised
leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Financial assets
Financial assets are classified as financial investments at fair value through profit or loss; loans and receivables; or as availablefor-sale (AFS) financial assets, as appropriate. The Group determines the classification of its financial assets at initial
recognition.
Non-current financial investments comprise unlisted securities, commercial papers, bonds and listed securities. Unlisted
securities are classified as AFS. Commercial papers, bonds and listed securities are held by the Group insurance company
which is required to comply with specific regulations for capital retention. Consequently the assets held under such regulations
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
7
are not available for alternative use by the Group and have been classified as non-current financial investments at fair value
through profit or loss.
Non-current trade and other receivables comprise long term interest bearing receivables and are classified as loans and
receivables.
Current financial investments comprise short-term investments and are classified as fair value through profit or loss.
Trade and other receivables are classified as loans and receivables.
Financial investments at fair value through profit or loss are assets classified as held for trading and other assets designated at
inception. Assets are carried on the balance sheet at fair value with gains or losses recognised in the income statement.
Loans and receivables are carried at amortised cost using the effective interest method if the time value of money is significant.
Gains and losses are recognised in income when the loans and receivables are derecognised or impaired, as well as through
the amortisation process. Trade and other receivables are carried at the original invoice amount, less an allowance made for
doubtful receivables. Provision is made when there is objective evidence that the Group will be unable to recover balances in
full. Balances are written off when the probability of recovery is assessed as being remote.
Available-for-sale financial assets are carried on the balance sheet at fair value, with gains or losses being recognised as a
separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which
time the cumulative gain or loss previously reported in equity is included in the income statement.
Cash and cash equivalents comprise cash in hand; current balances with banks and similar institutions; and short-term highly
liquid investments that are readily convertible to known amounts of cash and have a maturity of three months or less from the
date of acquisition.
Financial liabilities
Interest-bearing loans and borrowings are initially recognised at cost. After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by
taking into account any issue costs, and any discount or premium on settlement. Gains and losses arising on the repurchase,
settlement or cancellation of liabilities are recognised respectively in interest income and other financial items and interest and
other finance expenses.
Trade and other payables are carried at payment or settlement amounts. Where the time value of money is material, payables
are carried at amortised cost.
Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments to manage certain exposures to fluctuations in foreign currency exchange rates,
interest rates and commodity prices. From 1 January 2005, such derivative financial instruments are initially recognised at fair
value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are
carried as assets when the fair value is positive and as liabilities when the fair value is negative.
Contracts to buy or sell a non-financial item that can be settled net in cash or another financial instrument, or by exchanging
financial instruments, as if the contracts were financial instruments, with the exception of contracts that were entered into and
continue to be held for the purpose of the receipt or delivery of a non-financial item in accordance with the Group’s expected
purchase, sale or usage requirements, are accounted for as financial instruments.
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks
and characteristics are not closely related to those of host contracts and the host contracts are not carried at fair value.
Contracts are assessed for embedded derivatives when the Group becomes a party to them, including at the date of a business
combination. These embedded derivatives are measured at fair value at each period end. Any gains or losses arising from
changes in fair value are recognised in profit or loss for the period.
For those derivatives designated as hedges and where hedge accounting is to be applied, the hedging relationship is
documented at its inception. This documentation identifies the hedging instrument, the hedged item or transaction, the nature of
the risk being hedged and how effectiveness will be assessed throughout its duration. Such hedges are expected at inception to
be highly effective. For the purpose of hedge accounting, hedges are classified as: fair value hedges when hedging the
exposure to changes in the fair value of a recognised asset or liability; or cash flow hedges when hedging exposure to variability
in cash flows that is attributable to a particular risk associated with a recognised asset or liability.
The treatment of gains and losses arising from revaluing derivatives designated as hedging instruments depends on the nature
of the hedging relationship, as follows:
8
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
Fair value hedges: For fair value hedges, the carrying amount of the hedged item is adjusted for gains and losses attributable to
the risk being hedged; the derivative is re-measured at fair value and gains and losses from both are taken to profit or loss being
recorded in the same line. For hedged items carried at amortised cost, the adjustment is amortised through the income
statement such that it is fully amortised by maturity. When an unrecognised firm commitment is designated as a hedged item,
this gives rise to an asset or liability in the balance sheet, representing the cumulative change in the fair value of the firm
commitment attributable to the hedged risk. The Group discontinues fair value hedge accounting if the hedging instrument
expires or is sold, terminated or exercised, the hedge no longer meets the criteria for hedge accounting or the Group revokes
the designation.
Cash flow hedges: For cash flow hedges, the effective portion of the gain or loss on the hedging instrument is recognised
directly in equity, while the ineffective portion is recognised in profit or loss as a finance income or cost. Amounts taken to equity
are transferred to the income statement when the hedged transaction affects profit or loss, such as when a forecast sale or
purchase occurs, and are recognised in either revenue or cost of goods sold. Where the hedged item is the cost of a nonfinancial asset or liability, the amounts taken to equity are transferred to the initial carrying amount of the non-financial asset or
liability. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, the hedged
transaction ceases to be highly probable, or if its designation as a hedge is revoked, amounts previously recognised in equity
remain in equity until the forecast transaction occurs and are transferred to the income statement or to the initial carrying
amount of a non-financial asset or liability as above. If a forecast transaction is no longer expected to occur, amounts previously
recognised in equity are transferred to profit or loss.
Measurement of fair values
The fair values of quoted financial assets and liabilities are determined by reference to bid and ask prices respectively, at the
close of business on the balance sheet date. Where there is no active market, fair value is determined using valuation
techniques. These include using recent arm’s-length market transactions; reference to other instruments that are substantially
the same; discounted cash flow analysis; and pricing models. If fair value cannot be determined reliably, assets and liabilities
are carried at cost.
Taxation
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income
statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year and any adjustment to tax payable in respect of
previous years. Uncertain tax positions and potential tax exposures are analysed individually and the best estimate of the
probable amount for liabilities and virtually certain amount for assets to be paid or received in each case is recognised within
current tax or deferred tax as appropriate.
Deferred tax is provided using the balance sheet liability method. Deferred tax assets and liabilities are recognised for the future
tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the financial
statements and their respective tax bases, subject to the initial recognition exemption. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantially enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which
the asset can be utilised. However, the existence of unused tax losses is strong evidence that future taxable profits may not be
available. In order to recognise a deferred tax asset based on future taxable profits, convincing evidence is required taking into
account the existence of contracts, production of oil or gas in the near future based on volumes of proved reserves, observable
prices in active markets, expected volatility of trading profits and similar facts and circumstances.
A special petroleum tax is levied on profits derived from petroleum production and pipeline transportation on the Norwegian
Continental Shelf (NCS). The special petroleum tax is currently levied at a rate of 50 per cent. The special tax is applied to
relevant income in addition to the standard 28 per cent income tax, resulting in a 78 per cent marginal tax rate on income
subject to petroleum tax. The basis for computing the special petroleum tax is the same as for income subject to ordinary
corporate income tax, except that onshore losses are not deductible against the special petroleum tax, and a tax-free allowance,
or uplift, is granted at a rate of 7.5 per cent per year. The uplift is computed on the basis of the original capitalised cost of
offshore production installations. The uplift may be deducted from taxable income for a period of four years, starting in the year
in which the capital expenditures are incurred. Uplift benefit is recorded when the deduction is included in the current year tax
return and impacts taxes payable. Unused uplift may be carried forward indefinitely.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined by the first-in first-out method and
comprises direct purchase costs, cost of production, transportation and manufacturing expenses.
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
9
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision
due to the passage of time is recognised as other finance expenses.
Possible assets arising from past events that will only be confirmed by future uncertain events are not recognised, but are
disclosed when an inflow of economic benefits is probable.
Decommissioning and asset retirement obligations
Liabilities for decommissioning costs are recognised when the Group has an obligation to dismantle and remove a facility or an
item of property, plant and equipment and to restore the site on which it is located, and when a reasonable estimate of that
liability can be made. Estimated costs are based on current requirements. Normally an obligation arises for a new facility, such
as oil and natural gas production or transportation facilities, on construction or installation. An obligation for decommissioning
may also crystallise during the period of operation of a facility through a change in legislation or through a decision to terminate
operations. At the time of the obligating event, a decommissioning liability is recognised. The amount recognised is the present
value of the estimated future expenditure determined in accordance with local conditions and requirements. Calculation of this
amount requires judgment to be applied to identify which costs will be necessary, how much these will be, and the identification
of discount rate to be used. Refining and processing plants that are not limited by an expected license period have indefinite
lives and therefore there is no measurable asset retirement obligation to be recorded. For retail outlets, decommissioning
provisions are estimated on a portfolio basis.
When a liability for decommissioning cost is recognised, a corresponding amount is recorded to increase the related property,
plant and equipment. This is subsequently depreciated as part of the costs of the facility or item of property, plant and
equipment.
Any change in the present value of the estimated expenditure is reflected as an adjustment to the provision and the
corresponding property, plant and equipment.
Impairment
Intangible assets and property, plant and equipment
The Group assesses assets or groups of assets for impairment whenever events or changes in circumstances indicate that the
carrying value of an asset may not be recoverable. Individual assets are grouped based on separately identifiable and largely
independent cash flows. Normally, separate cash-generating units are individual oil and gas fields. Property, plant and
equipment are grouped by location.
If assets are determined to be impaired, the carrying amounts of those assets are written down to recoverable amount which is
the higher of fair value less costs to sell and value in use.
Impairments are reversed as applicable to the extent that the events or circumstances that triggered the original impairment
have changed.
Goodwill
Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying
value may be impaired. At the acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected
to benefit from the combination’s synergies.
Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates. Where
the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised, firstly
against goodwill and then pro-rata to the other assets of that unit. Impairments of goodwill are not reversed in future periods.
Financial assets
The Group assesses at each balance sheet date whether a financial asset or group of financial assets is impaired.
Assets carried at amortised cost: If there is objective evidence that an impairment loss on loans and receivables carried at
amortised cost has been incurred, the carrying amount of the asset is reduced. Any subsequent reversal of an impairment loss
is recognised in the income statement.
10
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
Available-for-sale financial assets: If an available-for-sale asset is impaired (significant or prolonged decline), the difference
between cost and fair value is transferred from equity to the income statement. Impairments of debt instruments are reversed to
the income statement as applicable. Impairments of equity instruments classified as available-for-sale are not reversed.
Key accounting estimates and significant judgments
The consolidated financial statements are prepared in accordance with accounting principles generally accepted under IFRS
which require that management make estimates and assumptions.
The matters described below are considered to be the most important in understanding the judgments that are involved in
preparing these statements and the uncertainties that could most significantly impact the amounts reported on the results of
operations, financial position and cash flows.
Proved oil and gas reserves. Oil and gas reserves have been estimated by internal experts in accordance with industry
standards. An independent third party has evaluated Statoil’s proved reserves estimates, and the results of such evaluation do
not differ materially from management estimates. Proved oil and gas reserves are the estimated quantities of crude oil, natural
gas, and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating conditions, i.e., prices and costs as of the date the
estimate is made. Prices include consideration of changes in existing prices provided only by contractual arrangements but not
on escalations based upon future conditions.
Proved reserves are used when calculating the unit of production rates used for depreciation, depletion, and amortisation.
Reserve estimates are also used when testing upstream assets for impairment. Future changes in proved oil and gas reserves,
for instance as a result of changes in prices, could have a material impact on unit of production rates used for depreciation and
amortisation and for decommissioning and removal provisions, as well as for the impairment testing of upstream assets, which
could have a material adverse effect on operating income as a result of increased deprecation and amortisation or impairment
charges.
Exploration and leasehold acquisition costs. The Group accounting policy is to capitalise the costs of drilling exploratory
wells pending determination of whether the wells have found proved oil and gas reserves. The Group also capitalise leasehold
acquisition costs and signature bonuses paid to obtain access to undeveloped oil and gas acreage. Judgments on whether
these expenditures should remain capitalised or expensed in the period may materially affect the operating income for the
period.
Unproved oil and gas properties are assessed quarterly and unsuccessful wells are expensed. Exploratory wells that have
found reserves, but classification of those reserves as proved depends on whether a major capital expenditure can be justified,
may remain capitalised for more than one year. The main conditions are that either firm plans exist for future drilling in the
license or a development decision is planned in the near future.
Impairment/reversal of impairment. The Group has significant investments in long-lived assets such as property, plant and
equipment and intangible assets, and changes in expectations of future value from individual assets may result in some assets
being impaired, with the book value being written down to estimated fair value. Impairments should be reversed if the conditions
for impairment are no longer present. Making judgments of whether an asset is impaired or not, and if an impairment should be
reversed, are complex decisions that rest on a high degree of judgment and to a large extent on key assumptions.
Complexity is related to the modelling of relevant future cash flows, to the determination of the extent of the asset for which
impairment is to be measured, to consistent application throughout the Group of relevant assumptions, and to establishing a fair
value of the asset in question.
Impairment testing requires long-term assumptions to be made concerning a number of often volatile economic factors such as
future market prices, currency exchange rates and future output, discount rates and political and country risk among others, in
order to establish relevant future cash flows. Long-term assumptions for major factors are made at group level, and there is a
high degree of reasoned judgment involved in establishing these assumptions, in determining other relevant factors such as
forward price curves, in estimating production outputs, and in determining the ultimate termination value of an asset. Likewise,
establishing a fair value of the asset, when required, will require a high degree of judgment in many cases where there is no
ready third party market in which to obtain the fair value of the asset in question.
Decommissioning and removal liabilities. The Group has significant legal obligations to decommission and remove offshore
installations at the end of the production period. Legal obligations associated with the retirement of non-current assets are
recognised at their fair value at the time the obligations are incurred. Upon initial recognition of a liability, that cost is capitalised
as part of the related non-current asset and allocated to expense over the useful life of the asset.
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
11
It is difficult to estimate the costs of these decommissioning and removal activities, which are based on current regulations and
technology. Most of the removal activities are many years into the future and the removal technology and costs are constantly
changing. The estimates include, among others, cost assumptions relating to removal complexity, rigs, marine operations and
heavy lift vessels. As a result, the initial recognition of the liability and the capitalised cost associated with decommissioning and
removal obligations, and the subsequent adjustment of these balance sheet items, involve the application of significant
judgment.
Employee retirement plans. When estimating the present value of defined pension benefit obligations that represent a gross
long-term liability in the consolidated balance sheet, and indirectly, the period’s net pension expense in the consolidated
statement of profit and loss, management make a number of critical assumptions affecting these estimates. Most notably,
assumptions made on the discount rate to be applied to future benefit payments, the expected return on plan assets and the
annual rate of compensation increase have a direct and material impact on the amounts presented. Significant changes in these
assumptions between periods can have a material effect on the accounts.
Derivative financial instruments and hedging activities. The Group recognises all derivatives on the balance sheet at fair
value. Changes in fair value of derivatives that do not qualify as hedges are included in income, whereas changes in fair value
of derivatives that do qualify as hedges are deferred in the balance sheet and are taken to income in future periods.
The application of hedge accounting requires extensive judgment and the choice of designation of individual contracts as
qualifying hedges can impact the timing of recognition of gains and losses associated with the derivative contracts, which may
or may not correspond to changes in the fair value of our corresponding physical positions, contracts and anticipated
transactions, which are not recorded at market value. Establishment of currency swaps in other than functional currency in the
Group’s debt portfolio to match expected underlying cash flows may result in gains or losses in the income statement as hedge
accounting is not allowed, even if the associated economical risk of the transactions is considered.
When not directly observable in the market or available through broker quotes, the fair value of derivative contracts must be
computed internally based on internal assumptions as well as directly observable market information, including forward and
yield curves for commodities, currencies and interest. Changes in internal assumptions and forward curves could have material
effects on the internally computed fair value of derivative contracts, particularly long-term contracts, resulting in corresponding
income or loss in the income statement.
Income tax. The Group annually incurs significant amounts of income taxes payable to various jurisdictions around the world,
and also recognises significant changes to deferred tax assets and deferred tax liabilities, all of which are based on
management’s interpretations of applicable laws, regulations and relevant court decisions. The quality of these estimates is
highly dependent upon management’s ability to properly apply at times very complex sets of rules, to recognise changes in
applicable rules and, in the case of deferred tax assets, management’s ability to project future earnings from activities that may
apply loss carry forward positions against future income taxes.
12
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
APPENDIX 2 – IFRS 1 EXEMPTIONS AND ELECTIONS APPLIED AND IAS 1 PRESENTATION
The Group applied IFRS 1, First-time Adoption of International Financial Reporting Standards in making the transition to IFRS,
with 1 January 2006 as the date of transition to IFRS. IFRS 1 requires that all IFRS standards and interpretations that are
expected to be effective for the first IFRS consolidated financial statements for the year ended 31 December 2007, be applied
consistently and retrospectively for all fiscal years presented. However, this standard provides exemptions and exceptions to
this general requirement in specific cases. The Group has chosen to apply the following exemptions:
Business Combinations
Business combinations that occurred before 1 January 2006, were not restated retrospectively in accordance with IFRS 3,
Business Combinations. Within the limits imposed by IFRS 1, the carrying amounts of assets acquired and liabilities assumed
as part of past business combinations as well as the amounts of goodwill that arose from such transactions as they were
determined under US GAAP, are considered their deemed cost under IFRS at the date of transition.
Cumulative currency translation differences
Cumulative currency translation differences as of 1 January 2006, arising from translation into NOK of the financial statements
of foreign operations whose functional currency is not the NOK were reset to zero. Accordingly, the cumulative translation
differences were included in Retained earnings in the IFRS opening balance sheet. In the case of subsequent disposal of an
entity concerned, no amount of currency translation difference relating to the time prior to the translation date will be included in
the determination of the gain or loss on disposal of such entity.
Decommissioning liabilities included in the cost of property, plant and equipment
IFRIC 1 Changes in Existing Decommissioning Restoration and Similar Liabilities requires changes in a decommissioning
liability to be added or deducted from the cost of the asset to which it relates. IFRS 1 allows a first time adopter to not comply
with this requirement for changes in such liabilities that occurred before the date of transition to IFRS. The Group has used this
exemption and has measured the liability at the date of transition in accordance with IAS 37, estimated the amount that would
have been included in the asset, and calculated the accumulated depreciation on that amount, on the basis of the current
estimate of the useful life of the asset.
Changes in presentation of the consolidated financial statements
The presentation of the consolidated financial statements has been modified to comply with the requirements of IAS 1,
Presentation of Financial Statements. As a result of applying the new option provided by IAS 19 to recognise actuarial gains and
losses directly in equity, consolidated statements of income and expense recognised in equity have been included. Under IFRS
minority interests are presented within equity.
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
13
APPENDIX 3 – CONSOLIDATED FINANCIAL STATEMENTS 2006 IFRS
Consolidated income statement
(in NOK million)
2006
Revenues
Net income/(loss) from equity accounted investments
Other income
431 757
408
1 801
TOTAL REVENUES AND OTHER INCOME
433 966
Cost of goods sold
Operating expenses
Selling, general and administrative expenses
Depreciation, amortisation and impairment
Exploration expenses
(245 492)
(33 653)
(8 486)
(21 714)
(5 664)
TOTAL OPERATING EXPENSES
(315 009)
NET OPERATING INCOME
Net foreign exchange gains and losses
Interest income and other financial items
Interest and other finance expenses
Net financial items
118 957
3 285
2 882
(2 370)
3 797
INCOME BEFORE TAX
122 754
Income tax
(81 889)
NET INCOME
40 865
Attributable to:
Equity holders of the parent company
Minority interest
40 135
730
40 865
Earnings per share for income attributable to the equity holders of the company - basic and diluted
14
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
18.57
Consolidated balance sheets at 31 December 2006 and 1 January 2006 (transition date)
(in NOK million)
31 Dec 2006
1 Jan 2006
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Equity accounted investments
Deferred tax assets
Pension assets
Non-current financial investments
Derivative financial instruments
185 875
167 847
21 330
16 427
6 824
6 364
375
372
1 113
2 114
13 566
13 409
450
835
3 541
4 153
233 074
211 521
14 371
11 455
Trade and other receivables
47 106
47 837
Derivative financial instruments
16 997
9 028
Current financial investments
1 031
6 841
Cash and cash equivalents
7 367
7 025
86 872
82 186
319 946
293 707
5 415
5 474
Non-current financial receivables
Total non-current assets
Current assets
Inventories
Total current assets
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity
Share capital
Treasury shares
(54)
(60)
Additional paid-in capital
37 366
Additional paid-in capital related to treasury shares
(3 605)
37 305
Retained earnings
87 483
65 983
264
694
(96)
Other reserves:
Available for sale financial assets
Currency translation adjustments
Total shareholders' equity
Minority interest
Total equity
(1 926)
-
124 943
109 300
1 574
1 592
126 517
110 892
29 966
32 222
Non-current liabilities
Non-current financial liabilities
Derivative financial instruments
66
113
47 726
43 325
7 394
6 220
28 161
22 254
113 313
104 134
Trade and other payables
41 213
42 931
Income taxes payable
Deferred tax liabilities
Pension liabilities
Non-current provisions
Total non-current liabilities
Current liabilities
30 219
29 750
Current financial liabilities
5 515
1 529
Derivative financial instruments
3 169
4 471
80 116
78 681
Total liabilities
193 429
182 815
TOTAL EQUITY AND LIABILITIES
319 946
293 707
Total current liabilities
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
15
Consolidated statement of recognised income and expense
(in NOK million)
2006
Foreign currency translation differences
Actuarial gains (losses) retirement benefit plans
Change in fair value of available-for-sale financial assets
Income tax on income and expense recognised directly in equity
(1 926)
(2 929)
(677)
2 294
Income and expense recognised directly in equity
(3 238)
Net income for the period
40 865
Total recognised income and expense for the period
37 627
Attributable to :
Equity holders of the parent company
Minority interests
36 897
730
Total recognised income and expense for the period
37 627
16
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
APPENDIX 4 - RESTATEMENT OF THE BALANCE SHEETS AT 1 JANUARY 2006 AND 31 DECEMBER 2006
Consolidated balance sheets at 1 January 2006 (transition date) and 31 December 2006
The following is the detailed restatement of 1 January 2006 balance sheet items under IFRS:
US GAAP on IFRS format
(in NOK million)
Transition
IAS 39
IAS 19
IAS 2 IAS 37
Reclassific
Financial
ations instruments Pensions Inventory
1 Jan 2006
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Equity accounted investments
Deferred tax assets
Pension assets
Non-current financial investments
Derivative financial instruments
Non-current financial receivables
180 669
2 130
6 624
4 105
5 796
11 442
4 080
(12 946)
14 101
(260)
(3 733)
Total non-current assets
214 846
(1 899)
8 369
49 118
2 780
6 841
7 025
266
(1 281)
(531)
6 779
74 133
(1 546)
6 779
-
2 820
288 979
(3 445)
6 779
(3 682)
2 820
Current assets
Inventories
Trade and Other receivables
Derivative financial instruments
Current financial investments
Cash and cash equivalents
Total current assets
TOTAL ASSETS
IAS 12
Deferred
ARO
tax adj.
(233)
IFRS
Other
differences 1 Jan 2006
357
196
(3 682)
31
835
73
1 936
-
(3 682)
-
(233)
-
2 489
2 820
167 847
16 427
6 364
372
2 114
13 409
835
4 153
211 521
11 455
47 837
9 028
6 841
7 025
(233)
-
-
82 186
-
2 489
293 707
EQUITY AND LIABILITIES
Equity
Share capital
Treasury shares
Additional paid-in capital
Additional paid-in capital related to
treasury shares
Retained earnings
Available for sale financial assets
Currency translation adjustments
Total shareholders' equity
Minority interest
Total equity
5 474
(60)
37 305
5 474
(60)
37 305
(96)
65 136
(1 115)
(1 115)
1 115
106 644
-
6 453
(5 338)
2 820
(233)
(3 767)
2 027
694
(96)
65 983
694
0
6 453
(5 338)
2 820
(233)
(3 767)
2 721
109 300
100
1 592
2 821
110 892
1 492
108 136
-
32 564
43 314
4 564
22 806
105
113
(3 756)
103 248
(3 493)
Current liabilities
Trade and other payables
Income taxes payable
Current financial liabilities
Derivative financial instruments
43 072
29 752
1 529
3 242
(141)
(2)
191
1 038
Total current liabilities
77 595
48
1 038
Non-current liabilities
Non-current financial liabilities
Derivative financial instruments
Deferred tax liabilities
Pension liabilities
Non-current provisions
Total non-current liabilities
6 453
(5 338)
2 820
(233)
(3 767)
(447)
(332)
32 222
113
43 325
6 220
22 254
(332)
104 134
3 767
1 656
45
(265)
(712)
1 656
-
-
3 767
42 931
29 750
1 529
4 471
-
-
-
-
-
3 767
Total liabilities
180 843
(3 445)
326
1 656
-
TOTAL EQUITY AND LIABILITIES
288 979
(3 445)
6 779
(3 682)
2 820
(233)
-
-
78 681
(332)
182 815
2 489
293 707
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
17
The following is the detailed restatement of 31 December 2006 balance sheet items under IFRS:
US GAAP on IFRS format
(in NOK million)
Transition
IAS 39
IAS 19
IAS 2
IAS 37
IAS 12
31 Dec Reclassifi
Financial
2006
cations instruments Pensions Inventory
ARO
Tax on
differences
IFRS
Other differences
31 Dec
2006
ASSETS
Non-current assets
Property, plant and equipment
209 601
(20 647)
Intangible assets
1 837
Equity accounted investments
7 299
(475)
Deferred tax assets
2 251
(1 876)
Pension assets
3 314
Non-current financial investments
Derivative financial instruments
Non-current financial receivables
Total non-current assets
(2 973)
21 102
(1 790)
185 875
181
21 330
6 824
375
(2 201)
1 113
12 420
-
(106)
1 146
450
450
3 541
240 263
13 566
3 541
(1 446)
-
(2 201)
-
(2 973)
(1 790)
1 221
233 074
Current assets
Inventories
11 872
Trade and Other receivables
47 106
2 499
14 371
47 106
Derivative financial instruments
7 829
Current financial investments
1 031
1 031
Cash and cash equivalents
7 367
7 367
Total current assets
TOTAL ASSETS
1 552
7 616
16 997
75 205
1 552
7 616
-
2 499
-
-
-
86 872
315 468
106
7 616
(2 201)
2 499
(2 973)
(1 790)
1 221
319 946
EQUITY AND LIABILITIES
Equity
Share capital
Treasury shares
5 415
Additional paid-in capital
Additional paid-in capital related to
treasury shares
37 366
Retained earnings
86 116
113
Currency translation adjustments
(3 123)
Minority interest
Total equity
(54)
37 366
(3 605)
Available-for-sale financial assets
Total shareholders' equity
5 415
(54)
122 228
(3 605)
(1 168)
8 162
(2 720)
2 499
(47)
(6 465)
1 168
-
-
87 483
151
264
29
8 162
(2 720)
2 499
(47)
(6 465)
1 465
123 693
1 106
8 162
(2 720)
2 499
(47)
(6 465)
(1 926)
1 286
124 943
109
1 574
1 395
126 517
Non-current liabilities
Non-current financial liabilities
Derivative financial instruments
Deferred tax liabilities
Pension liabilities
Non-current provisions
Total non-current liabilities
30 271
44 987
(305)
29 966
66
66
(1 936)
4 675
6 875
31 836
113 969
47 726
519
40
(1 830)
7 394
(241)
(2 926)
(546)
519
-
(2 926)
4 675
(548)
28 161
(548)
113 313
Current liabilities
Trade and other payables
40 839
Income taxes payable
30 219
374
Current financial liabilities
5 515
Derivative financial instruments
1 233
1 936
77 806
1 936
Total liabilities
191 775
106
TOTAL EQUITY AND LIABILITIES
315 468
106
Total current liabilities
18
41 213
30 219
5 515
3 169
(546)
7 616
-
-
-
-
374
80 116
519
-
(2 926)
4 675
(174)
193 429
2 499
(2 973)
(1 790)
(2 201)
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
1 221
319 946
Description of primary changes
Primary changes in accounting policy, required by the implementation of IFRS, are summarised below:
Adjustments
1.
Derivative financial instruments and hedge accounting
The Group is party to a number of contractual agreements, such as earn-out agreements and long-term sales agreements,
which are linked to underlying indices. These agreements are not accounted for as fair value derivatives under US GAAP due to
specific exemption rules in FAS 133 and related interpretations, whereas certain agreements are accounted for as fair value
derivatives under IFRS. This treatment under IFRS requires that the contracts are carried at fair value in the balance sheet, with
changes in fair value being recorded in the income statement.
Both US GAAP and IFRS allow hedge accounting to be used when specific criteria are met. There are differences in certain of
these criteria between US GAAP and IFRS and as a result, certain hedging transactions that can be hedge accounted under US
GAAP, do not qualify for hedge accounting under IFRS, and vice versa.
Under US GAAP a number of fair value hedges are accounted for using the short-cut method meaning that any ineffectiveness
is not recognised in the income statement. The same items and instruments are also accounted for as fair value hedges under
IFRS, which requires that any ineffectiveness is calculated and recorded in the income statement, resulting in a GAAP
difference.
In accordance with specific FAS 133 transition provisions, one hedging relationship involving part of a bond hedged with cross
currency interest rate swaps is accounted for as a hedge relationship under US GAAP. Due to the specifics of this
particular relationship and lack of similar transition provisions, hedge accounting is not permissible under IFRS. Consequently,
the bond is carried at amortised cost while the associated interest rate swaps are carried at fair value with changes being
reported in the income statement.
The effect of the above combined adjustments is to increase derivative financial instruments (current assets) by NOK 6.8 billion
at 1 January 2006 and by NOK 7.6 billion at 31 December 2006, increase derivative financial instruments (current liabilities) by
NOK 1.0 billion at 1 January 2006, reduce derivative financial instruments (non-current liabilities) by NOK 0.4 billion at 1
January 2006 and by NOK 0.3 billion at 31 December 2006, reduce non-current provisions by NOK 0.3 billion at 1 January 2006
and by NOK 0.2 billion at 31 December 2006, and to increase Sales by NOK 1.9 billion and to decrease Net financial items by
NOK 0.1 billion for the year ended 31 December 2006.
2.
Pensions
The Group IFRS accounting policy is to recognise actuarial gains and losses in respect of the Group’s pension and postretirement benefit plans directly to equity via the consolidated statement of recognised income and expense. Under US GAAP
(applicable until 31 December, 2006), actuarial gains and losses are deferred and recognised in future periods. Therefore a
GAAP difference exists at 1 January 2006, 31 March 2006, 30 June 2006, and 30 September 2006.
During the fourth quarter of 2006, a new US GAAP standard was issued that requires cumulative actuarial gains and losses to
be recognised in full in the 31 December 2006 balance sheet, with a corresponding adjustment to equity.
At 31 December 2006, there continue to be GAAP differences. Under US GAAP the equity adjustment relating to actuarial gains
and losses will be reversed in future periods applying the corridor approach and recorded to the income statement, whereas
under IFRS this entry is not allowed.
A remaining GAAP difference also exists in relation to the discount rate applied to the Group’s pension liabilities and service
costs. Under US GAAP, discount rates are set by reference to high-quality corporate bonds. IFRS specifically requires the use
of government bonds in countries where there is no deep market in high-quality corporate bonds, which is the case in Norway
and Sweden. As a result, the IFRS discount rates were lower than the US GAAP discount rates applied in the period, resulting
in a higher pension liability being recorded.
The effect is to reduce Pension assets by NOK 3.7 billion and increase Pension liabilities by NOK 1.7 billion at 1 January 2006,
and reduce Pension assets by NOK 2.2 billion and increase Pension liabilities by NOK 0.5 billion at 31 December 2006.
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
19
3.
Inventory - application of the FIFO cost method instead of LIFO
Under the Group’s US GAAP policy, the cost of inventories is measured using the last-in first-out (LIFO) method. Under IFRS,
inventory cost is measured on the basis of the first-in first-out (FIFO) formula. The effect is to increase Inventories by NOK 2.8
billion at 1 January 2006, by NOK 2.5 billion at 31 December 2006 and to increase Cost of Goods sold by NOK 0.3 billion for the
year ended 31 December 2006.
4.
Asset retirement obligations (ARO)
For both US GAAP and IFRS, the cost of property, plant, and equipment includes the estimated cost of dismantling and
removing the asset and restoring the site to the extent that such cost is recognised as a provision. The provision is measured as
the best estimate of future expense, discounted to today’s value using an appropriate discount rate.
Under US GAAP, the discount rate applied to an ARO obligation upon initial recognition is not changed throughout the life of the
provision. For any addition to an ARO obligation, the latest discount rate is used, and then this is not revisited in future periods.
Under IFRS, the discount rate applied to an ARO obligation is reviewed and updated each period.
The effect is to decrease Property, Plant and Equipment by NOK 0.2 billion at 1 January 2006, by NOK 3.0 billion at
31 December 2006, decrease Non-current provisions by zero at 1 January 2006, by NOK 2.9 billion at 31 December 2006, and
to decrease Depreciation, amortisation, and impairment by NOK 0.2 billion for the year ended 31 December 2006.
5.
Deferred tax
Deferred tax adjustments arise from both specific GAAP differences and from tax effects of adjustments recognised upon
conversion to IFRS.
Consequential deferred tax adjustments: Nearly all recognised IFRS conversion adjustments as discussed in this transition
document have related effects on deferred taxes.
Functional currency different than taxable currency: Under US GAAP, no deferred tax is recognised for differences resulting
from changes in exchange rates related to non-monetary assets and liabilities that are measured in the functional currency for
accounting purposes, but have a different taxable currency. Under IFRS deferred tax is recognised for differences related to
non-monetary assets and liabilities that are measured in the functional currency, but have a different taxable currency.
Tax on unrealised intra-group profits: Under US GAAP, deferred tax is recognised for differences arising from intra-group
transactions using the seller’s tax rate. Under IFRS, deferred tax is recognised using the buyer’s tax rate.
Exemptions: Under US GAAP deferred taxes are provided on virtually all temporary differences. IFRS has an exemption from
provisions to recognise deferred taxes on a transaction when the deferred tax assets/liabilities arise from the initial recognition
of assets and liabilities which at the time of the transaction, affects neither accounting profit nor taxable profit.
The effect of the above combined adjustments is to increase deferred tax liabilities by NOK 3.8 billion at 1 January 2006 and by
NOK 4.7 billion at 31 December 2006, decrease Intangible assets by NOK 1.8 billion at 31 December 2006, and to increase
income tax expense by NOK 1.4 billion for the year ended 31 December 2006.
6.
Other adjustments
Other adjustments comprise the following:
6.1
Adjustments to property, plant and equipment (PP&E)
The most significant adjustment to PP&E relates to significant periodic maintenance programs. Under the Group’s current US
GAAP policy, the estimated costs of future major maintenance and inspections are accrued in advance. Under IFRS, the costs
of major maintenance and inspection are included in the carrying amount of PP&E when incurred, and are depreciated over the
period to the next major maintenance and inspection date.
The effect is to increase Property, Plant, and Equipment by NOK 0.4 billion at 1 January 2006 and by NOK 0.3 billion at
31 December 2006, to decrease Non-current provisions by NOK 0.3 billion at 1 January 2006 and by NOK 0.5 billion at
31 December 2006, and to decrease Total Operating expenses by NOK 67 million for the year ended 31 December 2006.
A difference also exists for ‘abnormal waste’. Under US GAAP, all costs in the construction phase are normally capitalised.
Under IFRS, any costs that relate to abnormal waste are expensed.
The effect is to decrease Property, Plant, and Equipment by NOK 0.1 billion at 1 January 2006 and by NOK 0.4 billion at
31 December 2006, and to increase Total Operating expenses by NOK 0.3 billion for the year ended 31 December 2006.
20
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
6.2
Exchange of similar assets
In 2000 the Group swapped an ownership share in a processing plant to a third party, in exchange for receiving an ownership
share in another processing plant. Under US GAAP standards applicable at that time, no gain or loss was recorded on this
transaction. Under IFRS, a gain of NOK 0.9 billion was recorded, increasing Non-current financial investments by NOK 0.9
billion at both 1 January 2006 and 31 December 2006.
6.3
Available for sale financial asset
Under US GAAP, certain investments classified as available for sale financial assets are accounted for at cost due to lack of
readily determinable fair values. Under IFRS, these investments are classified as available for sale financial assets and carried
at estimated fair value in the balance sheet, with changes in fair value being recorded directly to equity.
The effect is to increase Non-current financial investments by NOK 1.0 billion at 1 January 2006 and by NOK 0.2 billion at
31 December 2006.
6.4
Reversal of impairment of exploration costs
Under US GAAP, certain exploration costs were expensed as impairment. Impairments are not reversed under US GAAP.
Under IFRS, impairments are reversed, as applicable, to the extent that the events or circumstances that triggered the original
impairment have changed.
The effect is to increase Intangible assets by NOK 0.2 billion at 1 January 2006 and at 31 December 2006.
6.5
Provisions
A decision was made and communicated in the fourth quarter of 2006 to implement a new business model, which included
amendments and terminations of franchise agreements in Sweden. At 31 December 2006, the criteria were not met to record a
provision for US GAAP purposes. Under IFRS, a provision was made at 31 December 2006 as the Group had a constructive
obligation.
The effect is to increase trade and other payables and selling, general and administration expenses by NOK 0.4 billion at
31 December 2006.
7
Reclassifications
Reclassifications comprise:
7.1
Re-inclusion of Discontinued Operations as Assets Held for Sale
Under US GAAP the Group has from January, 2006 classified its Irish downstream Retail and Commercial & Industrial business
("Statoil Ireland") as Held for sale in the balance sheet and as a discontinuing operation in the income statement for all periods
presented, including comparative figures.
Under IFRS, disposal groups are classified as discontinued operations where they represent a major line of business or
geographical area of operations. The Group has not classified Statoil Ireland as a discontinuing operation in the income
statement as it does not represent a separate major line of business or geographical area. Under IFRS, the classification as
Held for sale in the balance sheet is not reclassified for periods before the assets become held for sale, whereas under US
GAAP comparative figures are adjusted. The criteria for classification as held for sale were met in January 2006.
The balance sheet effect at 1 January 2006 is to increase Property, plant, and equipment by NOK 0.8 billion, Equity accounted
investments by NOK 99 million, Non-current financial investments by NOK 31 million, Non-current financial receivables by NOK
73 million, Inventories by NOK 0.3 billion, Trade and Other payables by NOK 0.1 billion, and Income taxes payable by NOK 2
million, and to decrease Trade and Other receivables by NOK 1.3 billion, Non-current financial liabilities by NOK 0.1 billion,
Deferred tax liabilities by NOK 33 million, and Non-current provisions by NOK 5 million.
The income statement effect for 2006 is to increase Revenues by NOK 6.4 billion, Other income by NOK 0.6 billion, Cost of
goods sold by NOK 5.6 billion, Operating expenses by NOK 69 million, Selling, general and administrative expenses by NOK
1.1 billion, Depreciation, amortisation, and impairment by NOK 11 million, Interest and other financial expenses by NOK 25
million, Income taxes by NOK 0.1 billion and to decrease Net income / loss affiliates by NOK 2 million and Net foreign exchange
gains and losses by NOK 1 million. The total effect is an increase in Net operating income of NOK 0.2 billion, an increase in
Income before income taxes of NOK 0.1 billion and no change to Net income.
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
21
7.2
Gross versus net presentation of derivative assets and liabilities
Under US GAAP the Group has applied certain options to present derivative assets and derivative liabilities on a net basis.
When there is an underlying agreement to offset, but there was no initial intention to do so, derivatives have been reclassified to
show gross amounts under IFRS.
The effect is to increase Derivative financial instruments (total current and non-current assets and liabilities) by NOK 0.3 billion
at 1 January 2006 and by NOK 2.0 billion at 31 December 2006.
7.3
Derivatives designated as hedging instruments
Under US GAAP, the fair value of derivatives designated as hedging instruments has been classified as current, in line with the
classification of the Group's other derivatives. Under IFRS the non-current portion of the fair value of derivatives designated as
hedging instruments has been classified as non-current assets and liabilities. The effect is to increase non-current Derivative
financial instruments, assets and liabilities respectively, by NOK 0.8 billion and NOK 0.1 billion at 1 January 2006, and by
NOK 0.5 billion and NOK 0.1 billion at 31 December 2006, and to decrease current Derivative financial instruments, assets and
liabilities respectively, by the same amounts.
7.4
Investments accounted for using the equity method - Aldbrough
Under US GAAP, the Group proportionally consolidated joint ventures and undivided interests held in the Oil & Gas segment,
but used equity method for all joint ventures in other segments. Under IFRS, all joint ventures and undivided interests have
been proportionately consolidated.
The 1 January 2006 effect is to increase Property, plant, and equipment by NOK 0.3 billion, decrease Equity accounted
investments by NOK 0.4 billion, decrease Deferred tax liabilities by NOK 56 million, and increase Non-current provisions by
NOK 40 million.
The 31 December 2006 effect is to increase Property, plant, and equipment by NOK 0.5 billion, decrease Equity accounted
investments by NOK 0.5 billion, decrease Deferred tax liabilities by NOK 60 million, and increase Non-current provisions by
NOK 40 million.
7.5
Capitalised costs before the development phase
Under US GAAP, capitalised costs before the development phase were classified as Property, plant, and equipment. Under
IFRS, capitalised costs before the development phase were classified as Intangible assets.
The effect is to decrease Property, plant, and equipment and increase Intangible assets by NOK 14.1 billion and NOK 21.1
billion at 1 January 2006 and 31 December 2006 respectively.
7.6
Deferred tax assets and liabilities
Classification rules for deferred tax assets and liabilities are different under IFRS compared to US GAAP. Current deferred tax
items have been reclassified to non-current assets and liabilities and total Deferred tax assets and Deferred tax liabilities have
been decreased by NOK 3.7 billion and NOK 1.9 billion at 1 January 2006 and 31 December 2006, respectively.
7.7
Cumulative translation differences
IFRS 1 allows for cumulative currency translation differences to be set to zero at 1 January 2006. US GAAP has no equivalent
to the transition arrangements of IFRS 1.
The effect is to transfer NOK 1.1 billion of currency translation differences from Other comprehensive income (US GAAP) to
Retained earnings at 1 January 2006.
7.8
Accretion expense
Under both US GAAP and IFRS certain liabilities are recorded in the balance sheet at a discounted amount. These liabilities will
increase each year due to the unwinding of the discount, as the liability becomes one year nearer. This increase (referred to as
‘accretion expense’) is reported as a cost in the income statement.
Under US GAAP, the accretion expense is recorded as an operating expense. Under IFRS, the accretion expense is recorded
as a finance cost. The effect is to decrease Operating expenses by NOK 0.9 billion and to decrease Net financial items (net
credit) by NOK 0.9 billion for the year ended 31 December 2006.
22
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
APPENDIX 5 - RESTATEMENT OF THE INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006
Consolidated Income statement
The following is the detailed restatement of 2006 income statement under IFRS:
US GAAP
(in NOK million)
2006
Revenues
Net income (loss) from equity accounted investments
423 528
IAS 39
IAS 12
Reclassifica
Financial
tions instruments Inventory Deferred tax
6 379
410
Other income
IAS 2
IFRS
Other
differences
1 850
2006
431 757
(2)
408
1 228
626
425 166
7 003
Cost of goods sold
(239 544)
(5 627)
Operating expenses
(34 320)
838
(171)
(33 653)
(6 990)
(1 126)
(370)
(8 486)
(21 767)
(11)
64
(21 714)
TOTAL REVENUES AND OTHER INCOME
Selling, general and administrative expenses
Depreciation, amortisation and impairment
Exploration expenses
TOTAL OPERATING EXPENSES
(5 664)
1 850
-
-
(53)
1 801
(53)
433 966
(321)
(245 492)
-
(5 664)
(308 285)
(5 926)
-
(321)
-
(477)
(315 009)
116 881
1 077
1 850
(321)
-
(530)
118 957
NET OPERATING INCOME
Net foreign exchange gains and losses
3 286
Interest income and other financial items
2 790
3 286
Interest and other finance expenses
(1 262)
(932)
(142)
Net financial items
4 814
(932)
(142)
INCOME BEFORE TAX
121 695
145
Income tax
(80 360)
(145)
NET INCOME
1 708
(321)
91
2 881
(34)
(2 370)
-
57
3 797
-
(473)
122 754
(1 384)
(81 889)
41 335
-
1 708
(321)
(1 384)
(473)
40 865
40 615
-
1 708
(321)
(1 384)
(483)
40 135
10
730
(473)
40 865
Attributable to:
Equity holders of the parent company
Minority interest
720
41 335
Earnings per share for income attributable to the equity
holders of the company - basic and diluted
-
1 708
(321)
(1 384)
18.79
18.57
See Appendix 4 for explanation of the adjustments.
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
23
APPENDIX 6 - RESTATEMENT OF THE QUARTERLY FINANCIAL STATEMENTS FOR 2006
Consolidated income statement for the quarter ended 31 March 2006
US GAAP
(in NOK million)
Revenues
Net income (loss) from equity accounted
investments
Other income
IAS 39
Reclassific
ations
Q1 2006
108 397
1 859
87
-
533
-
109 017
1 859
Cost of goods sold
(61 142)
(1 613)
Operating expenses
(8 318)
204
Selling, general and administrative expenses
(2 123)
(215)
Depreciation, amortisation and impairment
(5 391)
Exploration expenses
(1 066)
(78 040)
NET OPERATING INCOME
30 977
Net foreign exchange gains and losses
Interest income and other financial items
Interest and other finance expenses
Net financial items
INCOME BEFORE TAX
Income tax
NET INCOME
IAS 2
IAS 12
Deferred
Inventory
tax
IFRS
Other
differences
1 476
111 732
1 476
-
-
-
533
-
112 352
305
(62 450)
26
-
(27)
(5 418)
(1 066)
(1 624)
235
-
305
-
(1)
(79 360)
1 476
305
-
(1)
32 992
1 547
431
1 633
(8 088)
(2 338)
1 547
(345)
Q1 2006
87
TOTAL REVENUES AND OTHER INCOME
TOTAL OPERATING EXPENSES
Financial
instruments
23
(229)
(75)
(229)
(75)
32 610
6
(22 213)
(6)
1 401
454
(649)
-
-
23
1 352
305
-
22
34 344
(1 346)
(23 565)
10 397
-
1 401
305
(1 346)
22
10 779
10 263
-
1 401
305
(1 346)
20
10 643
Attributable to:
Equity holders of the parent company
Minority interest
134
10 397
24
-
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
1 401
305
(1 346)
2
136
22
10 779
Consolidated income statement for the quarter ended 30 June 2006
US GAAP
(in NOK million)
Q2 2006
Revenues
105 295
Reclassific
ations
2 013
Net income (loss) from equity accounted
investments
136
-
Other income
642
-
106 073
2 013
Cost of goods sold
(60 379)
(1 797)
Operating expenses
(7 990)
205
Selling, general and administrative expenses
(1 762)
(195)
Depreciation, amortisation and impairment
(4 994)
Exploration expenses
(1 167)
NET OPERATING INCOME
Net foreign exchange gains and losses
Interest income and other financial items
Interest and other finance expenses
Net financial items
INCOME BEFORE TAX
Income tax
NET INCOME
(76 292)
29 781
IAS 2
IAS 12
Financial
instruments
Inventory
Deferred
tax
IFRS
Other
differences
302
107 610
302
-
-
-
642
-
108 388
(320)
(62 496)
(42)
(27)
32 348
(5 020)
(1 167)
(1 786)
227
-
(320)
-
(69)
(78 467)
302
(320)
-
(69)
29 921
3 049
430
2 567
(7 827)
(1 957)
1
3 049
(912)
Q2 2006
136
TOTAL REVENUES AND OTHER INCOME
TOTAL OPERATING EXPENSES
IAS 39
23
(227)
(96)
(227)
(96)
-
206
453
(1 235)
(320)
(22 319)
-
23
2 267
-
(46)
32 188
(27)
(22 346)
10 029
-
206
(320)
(27)
(46)
9 842
9 749
-
206
(320)
(27)
(48)
9 560
Attributable to:
Equity holders of the parent company
Minority interest
280
10 029
2
-
206
(320)
(27)
(46)
282
9 842
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
25
Consolidated income statement for the quarter ended 30 September 2006
US GAAP
(in NOK million)
Q3 2006
Revenues
Net income (loss) from equity accounted
investments
106 245
Other income
Reclassific
ations
92
-
4
2 087
Cost of goods sold
(59 728)
(1 851)
Operating expenses
(8 194)
202
Selling, general and administrative expenses
(1 816)
(188)
Depreciation, amortisation and impairment
(5 025)
Exploration expenses
(1 514)
NET OPERATING INCOME
30 064
Net foreign exchange gains and losses
(3 678)
Interest income and other financial items
Interest and other finance expenses
IAS 12
Financial
instruments
Inventory
Deferred
tax
(237)
Q3 2006
108 095
-
-
-
4
-
108 191
194
(61 385)
(140)
(8 132)
(2 004)
-
37
(4 988)
(1 514)
(1 837)
250
(237)
194
-
(103)
(78 023)
194
-
(103)
30 168
(3 678)
1 861
22
(241)
109
Net financial items
(2 197)
(241)
109
INCOME BEFORE TAX
27 867
9
(19 059)
(9)
NET INCOME
Other
differences
(237)
(380)
Income tax
IFRS
92
106 341
(76 277)
IAS 2
2 087
TOTAL REVENUES AND OTHER INCOME
TOTAL OPERATING EXPENSES
IAS 39
(128)
(17)
1 883
(529)
-
-
5
(2 324)
194
-
(98)
27 844
(286)
(19 354)
8 808
-
(128)
194
(286)
(98)
8 490
8 591
-
(128)
194
(286)
(100)
8 271
Attributable to:
Equity holders of the parent company
Minority interest
217
8 808
26
-
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
(128)
194
(286)
2
219
(98)
8 490
Consolidated income statement for the quarter ended 31 December 2006
US GAAP
IAS 39
IAS 2
IAS 12
(in NOK million)
Q4 2006
Reclassifica
Financial
tions instruments
Inventory
Deferred
tax
Revenues
Net income (loss) from equity accounted
investments
103 591
Other income
420
95
IFRS
Other
differences
309
104 320
(2)
49
626
TOTAL REVENUES AND OTHER INCOME
103 735
1 044
Cost of goods sold
(58 295)
Q4 2006
93
309
(366)
-
-
(53)
622
(53)
105 035
(500)
(59 161)
Operating expenses
(9 818)
228
(16)
(9 606)
Selling, general and administrative expenses
(1 289)
(528)
(370)
(2 187)
Depreciation, amortisation and impairment
(6 357)
(10)
79
(6 288)
Exploration expenses
(1 917)
TOTAL OPERATING EXPENSES
NET OPERATING INCOME
Net foreign exchange gains and losses
Interest income and other financial items
Interest and other finance expenses
Net financial items
INCOME BEFORE TAX
Income tax
NET INCOME
(1 917)
(77 676)
(676)
26 059
368
2 368
-
(500)
-
(307)
(79 159)
309
(500)
-
(360)
25 876
(1)
2 367
821
(378)
(234)
(80)
2 811
(235)
(80)
28 870
133
229
(16 769)
(133)
(500)
-
23
844
(17)
(709)
6
(354)
278
2 502
28 378
(16 624)
12 101
-
229
(500)
278
(354)
11 754
12 012
-
229
(500)
278
(358)
11 661
Attributable to:
Equity holders of the parent company
Minority interest
89
12 101
4
-
229
(500)
278
(354)
93
11 754
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
27
Consolidated income statement quarterly (year to date (YTD)) - IFRS
(in NOK million)
Revenues
Net income (loss) from equity accounted investments
YTD Q1 2006
111 732
YTD Q2 2006
219 342
YTD Q3 2006
327 437
YTD Q4 2006
431 757
87
223
315
408
533
1 175
1 179
1 801
TOTAL REVENUES AND OTHER INCOME
112 352
220 740
328 931
433 966
Cost of goods sold
(62 450)
(124 946)
(186 331)
(245 492)
Operating expenses
(8 088)
(15 915)
(24 047)
(33 653)
Selling, general and administrative expenses
(2 338)
(4 295)
(6 299)
(8 486)
Depreciation, amortisation and impairment
(5 418)
(10 438)
(15 426)
(21 714)
Exploration expenses
(1 066)
(2 233)
(3 747)
(5 664)
(79 360)
(157 827)
(235 850)
(315 009)
32 992
62 913
93 081
118 957
1 547
4 596
918
3 285
454
154
2 038
2 882
(1 131)
(1 661)
(2 370)
1 352
3 619
1 295
3 797
34 344
66 532
94 376
122 754
(23 565)
(45 911)
(65 265)
(81 889)
10 779
20 621
29 111
40 865
10 643
20 203
28 474
40 135
Other income
TOTAL OPERATING EXPENSES
NET OPERATING INCOME
Net foreign exchange gains and losses
Interest income and other financial items
Interest and other finance expenses
Net financial income
INCOME BEFORE TAX
Income tax
NET INCOME
(649)
Attributable to:
Equity holders of the parent company
Minority interest
28
136
418
637
730
10 779
20 621
29 111
40 865
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
Consolidated balance sheets as at quarter end - IFRS
(in NOK million)
1 Jan 2006
31 Mar 2006
30 June 2006
30 Sept 2006
31 Dec 2006
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Equity accounted investments
Deferred tax assets
Pension assets
Non-current financial investments
Derivative financial instruments
Non-current financial receivables
167 847
16 427
6 364
372
2 114
13 409
835
4 153
168 559
16 836
6 324
365
2 116
13 928
410
3 471
167 875
17 938
6 525
321
1 800
13 767
160
3 228
176 609
17 139
7 000
348
1 487
13 249
541
3 395
185 875
21 330
6 824
375
1 113
13 566
450
3 541
Total non-current assets
211 521
212 009
211 614
219 768
233 074
Current assets
Inventories
Trade and other receivables
Derivative financial instruments
Current financial investments
Cash and cash equivalents
11 455
47 837
9 028
6 841
7 025
12 267
52 556
11 726
22 176
19 742
13 889
45 601
12 015
9 899
9 054
14 591
41 651
14 126
25 771
17 209
14 371
47 106
16 997
1 031
7 367
Total current assets
82 186
118 467
90 458
113 348
86 872
293 707
330 476
302 072
333 116
319 946
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity
Share capital
Treasury shares
Additional paid-in capital
Additional paid-in capital related to treasury
shares
Retained earnings
Other reserves
Available for sale financial assets
Currency translation adjustments
Total shareholders' equity
5 474
(60)
37 305
5 474
(61)
37 320
5 415
(2)
37 333
5 415
(24)
37 344
5 415
(54)
37 366
(96)
65 983
(116)
76 633
(136)
68 438
(1 578)
76 699
(3 605)
87 483
694
-
702
(1 444)
691
(4 027)
178
10
264
(1 926)
109 300
118 508
107 712
118 044
124 943
1 592
1 560
1 620
1 578
1 574
110 892
120 068
109 332
119 622
126 517
32 222
113
43 325
6 220
22 254
31 714
306
45 185
6 217
22 446
28 495
425
45 787
6 234
20 531
30 862
167
47 034
6 265
21 236
29 966
66
47 726
7 394
28 161
104 134
105 868
101 472
105 564
113 313
Current liabilities
Trade and other payables
Income taxes payable
Current financial liabilities
Derivative financial instruments
42 931
29 750
1 529
4 471
47 708
49 914
3 883
3 035
44 130
40 135
4 437
2 566
40 759
56 273
5 857
5 041
41 213
30 219
5 515
3 169
Total current liabilities
78 681
104 540
91 268
107 930
80 116
Total liabilities
182 815
210 408
192 740
213 494
193 429
TOTAL EQUITY AND LIABILITIES
293 707
330 476
302 072
333 116
319 946
Minority interest
Total equity
Non-current liabilities
Non-current financial liabilities
Derivative financial instruments
Deferred tax liabilities
Pension liabilities
Non-current provisions
Total non-current liabilities
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
29
APPENDIX 7 - RESTATEMENT OF THE QUARTERLY FINANCIAL STATEMENTS BY SEGMENT
(in NOK million)
International
Exploration and
Production Exploration and
Production
Norway
Natural
Gas
Manufacturing
and Marketing
Other Eliminations
Total
Three months ended
31 March 2006
Revenues third party (including Other income)
Revenues inter-segment
Net income (loss) from equity accounted
investments
1 998
29 505
2 179
4 396
17 313
178
90 699
228
76
260
(12)
0
54
46
(1)
Total revenues and other income
31 491
6 575
17 545
90 973
335
(34 567)
112 352
Net operating income
24 934
3 677
3 806
1 558
(402)
(581)
32 992
(18 884)
(1 355)
(2 653)
(452)
88
(23 256)
6 050
2 322
1 153
1 106
(402)
(493)
9 736
Three months ended
30 June 2006
Revenues third party (including Other income)
Revenues inter-segment
Net income (loss) from equity accounted
investments
895
27 590
1 888
4 523
13 473
166
91 890
161
106
339
(32 779)
108 252
0
55
0
47
41
(7)
Total revenues and other income
28 540
6 411
13 686
92 092
438
(32 779)
108 388
Net operating income
21 837
3 375
2 924
2 461
(16)
(660)
29 921
(16 447)
(965)
(2 075)
(742)
0
27
(20 202)
5 390
2 410
849
1 719
(16)
(633)
9 719
Period ended
30 June 2006
Revenues third party (including Other income)
Revenues inter-segment
Net income (loss) from equity accounted
investments
2 893
57 095
4 067
8 919
30 786
344
182 589
389
182
599
(67 346)
220 517
0
43
0
101
87
(8)
Total revenues and other income
60 031
12 986
31 231
183 065
773
(67 346)
220 740
Net operating income
46 771
7 052
6 730
4 019
(418)
(1 241)
62 913
(35 331)
(2 320)
(4 728)
(1 194)
0
115
(43 458)
Segment net income
11 440
4 732
2 002
2 825
(418)
(1 126)
19 455
Three months ended
30 September 2006
Revenues third party (including Other income)
Revenues inter-segment
Net income (loss) from equity accounted
investments
116
27 734
1 598
4 677
14 102
173
92 193
117
90
323
(33 024)
108 099
0
20
0
51
27
(6)
Total revenues and other income
27 870
6 275
14 326
92 337
407
(33 024)
108 191
Net operating income
21 903
2 499
2 378
2 093
(323)
1 618
30 168
(16 478)
(2 230)
(1 616)
(550)
0
(557)
(21 431)
5 425
269
762
1 543
(323)
1 061
8 737
Imputed segment income tax
Segment net income
Imputed segment income tax
Segment net income
Imputed segment income tax
Imputed segment income tax
Segment net income
30
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
(34 567)
112 265
0
87
136
223
92
(in NOK million)
Exploration and
International
Production Exploration and
Norway
Production
Natural
Gas
Manufacturing
and Marketing
Other Eliminations
Total
Period ended
30 September 2006
Revenues third party (including Other income)
Revenues inter-segment
Net income (loss) from equity accounted
investments
3 009
84 829
5 665
13 596
44 888
517
274 782
506
272
922
63
0
152
114
(14)
Total revenues
87 901
19 261
45 557
275 402
1 180
(100 370)
328 931
Net operating income
68 674
9 551
9 108
6 112
(741)
377
93 081
(51 809)
(4 550)
(6 344)
(1 744)
0
(442)
(64 889)
Segment net income
16 865
5 001
2 764
4 368
(741)
(65)
28 192
Three months ended
31 December 2006
Revenues third party (including Other income)
Revenues inter-segment
Net income (loss) from equity accounted
investments
731
27 900
1 288
4 125
17 300
135
85 517
91
106
312
(32 563)
104 942
0
15
0
66
17
(5)
Total revenues and other income
28 646
5 413
17 501
85 625
413
(32 563)
105 035
Net operating income
21 236
1 206
2 895
457
144
(62)
25 876
(15 867)
(499)
(1 915)
(11)
0
(30)
(18 322)
5 369
707
980
446
144
(92)
7 554
Year ended
31 December 2006
Revenues third party (including Other income)
Revenues inter-segment
Net income (loss) from equity accounted
investments
3 740
112 729
6 953
17 721
62 188
652
360 299
597
378
1 234
(132 933)
433 558
0
78
0
218
131
(19)
Total revenues and other income
116 547
24 674
63 058
361 027
1 593
(132 933)
433 966
89 910
10 757
12 003
6 569
(597)
315
118 957
(67 676)
(5 049)
(8 259)
(1 755)
0
(472)
(83 211)
22 234
5 708
3 744
4 814
(597)
(157)
35 746
Imputed segment income tax
Imputed segment income tax
Segment net income
Net operating income
Imputed segment income tax
Segment net income
(100 370)
328 616
0
315
93
408
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
31
APPENDIX 8 – BALANCE SHEET RECLASSIFICATIONS FROM US GAAP FORMAT TO IFRS FORMAT 31 December 2005
Balance sheet reclassifications from US GAAP format to IFRS format 31 December 2005
US GAAP balance sheet in IFRS order
Net property, plant and equipment
31 Dec 2005
Reclassifications
/move of balance
sheet accounts
180 669
Investment in affiliates
4 352
Other assets
Long-term receivables
16 474
9 618
2 130
2 272
4 105
5 796
(5 032)
(5 538)
3 733
Current assets
Inventories
Account receivable
8 369
42 816
Prepaid exp. and other current assets
Short-term investments
Cash and cash equivalents
12 815
6 841
7 025
Total current assets
77 866
(3 733)
288 979
-
TOTAL ASSETS
Share capital
Treasury shares
Additional paid-in capital
Additional paid-in capital related to
treasury shares
Retained earnings
Other comprehensive income
Total shareholders' equity
Minority interest
6 302
2 780
(12 815)
5 474
(60)
37 305
Reclassified USGAAP balance sheet
31 Dec 2005 in IFRS order
180 669
2 130
6 624
4 105
5 796
11 442
4 080
214 846 Total non-current assets
8 369
49 118
2 780
6 841
7 025
(265)
265
106 644
-
Current assets
Inventories
Trade and other receivables
Derivative financial instruments
Current financial investments
Cash and cash equivalents
74 133 Total current assets
288 979 TOTAL ASSETS
5 474
(60)
37 305
(96)
65 401
(1 380)
ASSETS
Non-current assets
Property, plant, and equipment
Intangible assets
Equity accounted investments
Deferred tax assets
Pension assets
Non-current financial investments
Non-current financial receivables
(96)
65 136
(1 115)
EQUITY AND LIABILITIES
Equity
Share capital
Treasury shares
Additional paid-in capital
Additional paid-in capital related to
treasury shares
Retained earnings
Currency translaton adjustments
106 644 Total shareholders' equity
1 492 Minority interest
1 492
108 136 Total equity
Long-term debt
Deferred income taxes
32 564
43 314
Other liabilities
27 370
4 564
(4 564)
-
Non-current financial liabilities
Deferred tax liabilities
Pension liabilities
Non-current provisions
103 248 Total non-current liabilities
22 518
9 766
14 030
29 752
1 529
Total current liabilities
77 595
3 242
-
180 843
-
180 843 Total liabilities
288 979
-
288 979 TOTAL EQUITY AND LIABILITIES
32
STATOIL 2007 TRANSITION DOCUMENT FROM USGAAP TO IFRS
43 072
29 752
1 529
3 242
77 595
Current liabilities
Trade and other payables
Accounts payable
Accounts payable - related parties
Accrued liabilities
Income taxes payable
Short-term debt
Total liabilities
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
20 554
(9 766)
(14 030)
32 564
43 314
4 564
22 806
Income taxes payable
Current financial liabilities
Derivative financial instruments
Total current liabilities